Granny flat provisions 108-06010040

Has another person transferred property to the customer, creating a granny flat interest?

• Yes, see Life interest in an asset or income. Procedure ends here
• No, go to Step 2

If the customer has:

• created, or is considering creating a granny flat interest, go to Step 3
• vacated a granny flat interest, see Step 9 in Table 2

If the customer is considering creating a granny flat interest, tell the customer Services Australia recommends the customer gets both:

• financial advice, and
• legal advice. Having a legal document drawn up provides proof of the agreement that may help prevent/solve problems later on

Offer the customer a referral to a Financial Information Service (FIS) Officer.

Where the customer states they have already created a granny flat interest, they must provide information regarding the establishment of the granny flat interest.

• If needed, update address details
• Ask the customer for supporting documents. These may include:
• documents verifying transfer of title if the property was owned by the customer
• copy of formal agreement, if one exists
• copy of will, if from a deceased estate
• a letter from the owner or lessee stating the customer has the right to occupancy for life, or a life interest
• details of customer's contribution, such as copy of building contract, transfer documents
• If required, follow Requesting Information (CLK) to use a QSS32 to obtain information and request supporting documents needed to assess the customer's circumstances. See Resources page for suggested questions

If the customer has made payments, such as construction progress costs, but is yet to receive the right to accommodation then deprivation applies. The granny flat interest applies when the customer moves in, that is, construction is complete or the other party provides the customer with accommodation elsewhere, as the right to accommodation is now being received. Any previously assessed deprivation would then cease, unless additional assets were transferred, including where the customer has more than one granny flat right.

On receipt of required information and documents, go to Step 4.

Has the customer 'paid' for a right to accommodation for life or a life interest in a private residence? Paid means cash and/or transferred assets.

• Yes, go to Step 5
• No, see Step 8 in Table 2

This is the amount paid for the interest.

The value of the granny flat interest is equal to the amount paid for the life interest/right to accommodation in the following circumstances:

• The customer transfers all of the title of their home and keeps a right to live for life in that property, or in another property owned by the other party
• The customer pays to construct and fit out a home on another person's property and keeps a right to live in it for life
• The customer provides some or all of the purchase price of a property in another person's name and keeps a right to live in it for life

In these circumstances, there is no deprivation, go to Step 3, Table 2.

Note: deprivation may apply if the customer is building or renovating a home to create a granny flat interest and has made progress payments/paid construction costs but is not yet receiving accommodation in return.

If cash or other assets were used to pay for the granny flat right, or additional assets were transferred, or the customer has more than one granny flat right, go to Step 6.

The reasonableness test must be calculated by a Complex Assessment Officer (CAO) when a customer has:

• transferred additional assets, or
• provided cash in exchange for a granny flat right, or
• has more than one granny flat right

Additional assets may include:

• any land, that is not an exempt asset under the home and curtilage rules. See the Resources page for scenario/example
• any commercial properties
• financial investments or
• cash

Has the customer created more than one granny flat right, transferred or gifted extra assets or given cash in exchange for a granny flat right?

• Yes, see Step 1 in Table 2
• No, see Step 3 in Table 2

Refer all assessments of the reasonableness test to the Complex Assessment Officer (CAO)

• using the CAO Referral guided procedure, or
• Process Direct, under

The CAO will apply the reasonableness test and compare the:

• value of the cash paid for the granny flat right, or
• the cost of the home and any additional assets, or
• the total paid where there is more than one right to accommodation

The value of the granny flat interest is the greater of the value of the granny flat right or the reasonableness test amount.

If the customer has paid for more than one life interest or right to accommodation and the total paid is not more than the reasonableness test amount, deprivation does not apply.

If the customer has paid for more than one life interest or right to accommodation and the total paid is more than the reasonableness test amount, the principal home is the one where the customer spends the most time. The amounts paid for the other rights to accommodation are a gift. If they spend equal time in each granny flat interest, treat the most expensive granny flat interest as the principal home.

Was the contribution reasonable?

• Yes, go to Step 3
• No, go to Step 2

Tell the customer deprivation will apply to the difference between:

• For rights where additional assets have been transferred: the value of the property and any additional assets over and above the reasonableness test amount, or
• For rights where the customer paid a sum of money: the value of funds transferred to establish the granny flat right over and above the reasonableness test amount, or
• For multiple granny flat rights where the total paid is above the reasonableness test amount: the value of the home(s) not considered to be the principle home

Explain:

• how the reasonableness test amount has been worked out
• how Services Australia assess deprivation/gifting

If the customer has paid funds towards a future granny flat right, such as paying construction costs but is not receiving the right to accommodation from other person, see Assessing deprivation/gifting.

The granny flat provisions apply once the right to accommodation is being received, that is, the customer moves into the newly built home or another residence that belongs to the person with whom the interest has been created. When this occurs see Assessing returned gifts and refer to Step 3 in Table 1.

Home ownership status is decided by comparing the entry contribution to the Extra Allowable Amount (EAA).

The EAA is the difference between the homeowner and non-homeowner assets test limit.

If the entry contribution is

• more than the EAA at the time the granny flat interest was created, go to Step 4
• less than or equal to than the EAA at the time the granny flat interest was created, go to Step 5

The customer is a homeowner.

The entry contribution is not included in the customer's assets.

The customer is not eligible for Rent Assistance.

Check/update the Home Ownership field on the Accommodation Details (AC) screen. It must show the correct special residence homeowner code.

Go to Step 6.

The customer is a non-homeowner.

The entry contribution is included as an asset of the customer but is not deemed. Code the entry contribution amount on the Other Assets (OAS) screen with the Description as 'OTHER - ENTRY CONTRIBUTION'.

Customer is eligible for Rent Assistance (RA) for any rent they pay above the rent threshold. Search for, or reissue, a Rent Certificate (SU523HD) using the Outbound correspondence tool in Customer First.

Check/update the Home Ownership field on the Accommodation Details (AC) screen. It must show the correct special residence non-homeowner code.

Go to Step 6.

Tell the customer that the value of the property may be assessed under the deprivation provisions if:

• they vacate 'the granny flat' within 5 years of the date they created the interest, and
• the reason they left would have been known at the time the interest was created

Deprivation will be assessed from the date they permanently vacate the home until the end of the 5-year period from the date of the transfer of the property.

See the Resources page for scenarios/examples.

Go to Step 7.

Update any changes needed.

This can include real estate or timeshare sold or gifting.

Record the details on a DOC.

Procedure ends here.

To see which category of accommodation fits the customer's situation:

• Rent Assistance (RA)
• See the References page for information on:
• Homeowners and non-homeowners
• Retirement villages
• If valuable consideration (see the References page for information) has been exchanged consider the deprivation provisions

Record details on a DOC.

Procedure ends here.

Has the granny flat been vacated within 5 years?

• Yes:
• Refer the customer to a CAO. Run the CAO referral script or guided procedure. Use the region code 'CAO'
• The CAO will decide if deprivation applies. There is no deprivation if the customer could not have known they would vacate when they created the granny flat interest
• Unforeseen circumstances may include:
  - sudden onset of illness (when vacating to enter permanent care, consideration should be given as to whether this entry to care was known at the time the granny flat interest was created)
  - family relationship breakdown
  - elder abuse
  - damage to the property that leaves it uninhabitable
• If deprivation has occurred, the CAO must:
  - determine the amount of deprivation and the period it applies to
  - go to Step 10
• If no deprivation has occurred, complete all other updates related to the change of address, see Permanent vacation of principal home
• No, go to Step 11

Coding deprivation for a vacated granny flat (for CAO only)

The GIFT screen can only assess deprivation for a full 5-year period. Staff must use an alternate coding method for a period of less than 5 years. This is when deprivation due to the vacation of a granny flat interest has been determined.

Calculate the gift amount to code on SVDI.

Note: staff must check the Gifts and Deprived Assets (GIFTS) screen for any previous gifts to determine if the 1 and 5 year disposal limit has already been reached:

Has the 1 and 5 year disposal limit been reached?

• Yes, the value of the vacated granny flat interest is the gift amount
• No, subtract the $10,000 disposal limit from the value of the vacated granny flat interest before recording on SVDI

Record on the Direct Investment Account (SVDI) screen:

Staff should use the following Header Details:

• Investment Type Code: OTH - Direct Investment
• Investment Name key, 'Vacated granny flat interest'
• Customer owned % key
• Partner owned %:

Record the following Item Details

• Event Date key, date of vacation of granny flat
• Balance Amount: the value of the deprived granny flat interest

In Customer First, create a manual review on the Review Registration (RVR) screen and complete the fields as follows:

• Service Reason: customer's payment type
• Review Reason: DEP (Inc/Ass Deprivation - Review)
• Due Date: end of the 5 year period from the original date of the transfer of the property
• Source: INT
• Date of Receipt: today's date
• Notes: 'Update the deprived amount on SVDI screen to nil.'
• Keywords: GFSVDI
• Workgroup: leave blank
• Position: leave blank
• Transfer to Region: leave blank

The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action.

For example, the customer gifts their home property on 1 July 2020 creating a granny flat interest. On 1 July 2021, they vacate the property to move to a unit they have recently purchased. This was their intention at the time they created the granny flat interest. The value of their contribution was not returned when they moved to the unit. Deprivation applies from 1 July 2021 to 30 June 2025.

In this example, code the event date as 1 July 2021; and the system will read to 30 June 2025. Set the review date to remove the gift as 1 July 2025.

Note: record a Display on access (DOA) DOC with the details of the assessment. This should include that the gift recorded on SVDI must be taken into account if the customer and/or their partner make further gifts while the GF vacation deprivation is being applied. For each future gift during this period, a manual calculation will be required to determine the correct disposal limit and deprived amount to be recorded on the GIFT screen.

In the example above, for any additional gifts made by the customer and/or their partner between 1 July 2021 and 30 June 2025, the deprived amount will need to be manually calculated by including the granny flat vacation gift amount recorded on the SVDI screen

As part of the assessment, CAO is to include the outcome of the homeownership status. For determining homeownership status, go to Step 11.

Partnered homeowners

The ongoing homeowner status stays the same as that of their partner remaining in the granny flat home.

If the customer and partner are not going back to the granny flat interest, they may be a homeowner or non-homeowner. This depends on their new accommodation. For example, entering aged care or renting privately.

Single homeowners

They can only be assessed as an ongoing homeowner if they intend to return to this address.

Single non-homeowners

Code the entry contribution as '0' on the Other Assets (OAS) screen.